Alternative lending

Can I still qualify for a mortgage with bruised credit?

Are banks turning you away because of bad credit? If you don’t have a good credit rating, many lenders will deem you to be high-risk.

Some of Canada biggest lenders have all but ended lending to people who fall short in income and credit. The good news, if you’ve been turned away by traditional lenders, there are options.

Who are the bruised credit lenders in Canada?

There are plenty of bruised credit mortgage lenders in Canada, you just need an expert to help find the right one. That’s where a mortgage broker can help.

Astra Mortgage Mortgage Services focuses on mortgages that are hard fund. Since we only deal with difficult mortgages we have more choices than other mortgage brokers in the industry.

Astra Mortgage works with you in order to best source out the lender, explain the solution and derive a plan to return to ‘A’ sector – resulting in success and efficiency for everyone.

How do I qualify with a bruised credit mortgage lender in Canada?

While it can be upsetting to be turned down by your bank because of bad credit, there are many institutions and alternative lenders who don’t use credit or income to approve mortgages where credit is bruised. Trust companies and credit unions and private lenders are still approving a number of mortgages.

While the stats show lenders are increasingly reviewing every deal case by case, which means fewer mortgage loan applications involving bruised credit are being declined.

It’s important to remember outside of the big banks, equity is more important than credit for many lenders. The larger your down payment, the more likely you are to get approved. If you’re purchasing a home and you don’t have good credit, you should have 20% down, in addition to closing costs.

Mortgage lenders who deal with bruised credit are often willing to look past a variety of credit issues including:

• An unpaid payday loan(s)
• Consumer proposal & bankruptcy
• Tax debt
• Instalment loans, unsecured loans & credit cards in arrears
• Property tax arrears
• Mortgage arrears

As you can see, no matter your credit situation, there’s always a lender out there to help as long as you equity or a large downpayment.

What is a second mortgage?

A second mortgage AKA as a home equity loan, is a standard mortgage charge against a property, very much in the same manner a “regular” mortgage is. You are using your home or property as collateral and a loan is being registered against in, in second priority position.

Banks and Credit unions are offering less products than ever in this second mortgage space. The ones that do, many are switching to a HELOC (Home Equity Line Of Credit) products which are tough to qualify for after the recent mortgage regulation changes.

A 2nd mortgage on the other hand is almost always approved off the equity position. If you have strong equity or are in a good loan to value place (loan amount vs home value) then lenders are mostly concerned about that and the quality of the property or asset. The lower the risk factor – loan vs value – the easier it is to be approved.

• Second mortgages are most commonly used as a tool for debt consolidation – using it as a way to lower monthly payments by also increasing your credit score by paying down trade lines. In addition you may also use a second mortgage for
  • Property Tax Arrears
  • Mortgage Arrears on 1st
  • Rebuilding Credit
  • Home improvements/renovations
  • Paying out Proposals
  • And much more.

In other words, because lenders place few restrictions on equity based financing, there are almost no restrictions on what you can use your loan for – as long as it makes sense, is within your budget and you have the equity there should be options available to you.

Can I Get a Second Mortgage in Canada with Bad Credit?

Getting a second mortgage with poor credit is a very common thing. As we’ve noted earlier, many times they can be used to drastically increase your credit score and profile.

Second mortgage lenders – especially those working with clients with damaged or lower scores work almost exclusively with select mortgage brokers who specialize in the space – Such as Astra Mortgage Mortgage Services. These relationships can help you to receive the best overall service and pricing.

Have you had issues getting approved for loans because you are business for self/self-employed? Many banks, credit unions and other lenders have pretty tight income guidelines, which may not always work with how you’ve set up your business. These days, having a great credit background isn’t always enough to get approvals, and if you’ve tried and had issues with their criteria, you aren’t alone.

Due to these circumstances, it has created a bit of a niche market for a new set of lenders, who have a more open mind with self-employed applicants. If we can reasonably show lenders that you have the means to make all the payments comfortably, there are lenders and specifically still bank/institutions who can help.

This can apply to many different fields, such as commission sales, (some cash jobs), service industry (tips), disability pay, and pension pay.

Astra Mortgage has done thousands of these types of files, and if you are having issues as your income is written down, or not established enough please reach out.

Both bankruptcies and consumer proposals are looked at very serious by potential mortgage lenders, and are considered a last resort situation to give someone a fresh start. They are seen as a bit of a bailout, and as far as best rate lenders go, you only receive one bailout allowed in order to get mortgage financing. A consumer proposal is a little less severe, as you’ve made an effort to still make some payments to creditors. As such, it falls off credit bureaus after three years. With a bankruptcy, it will sit on there for six years from discharge of the bankruptcy. For banks or best rate lenders, they will need to see at least two years of perfect credit history from time of discharge and two established trade lines (credit card, car loan, loan instalment, etc) to begin considering you again for their products. Two years is the minimum and many times it can move to three years or more.

That said, Astra Mortgage works with many lenders, including some Alternative Banks that can finance you literally the same day as your bankruptcy discharge, and can even help to payout proposals if you have qualifying equity. If you are in either of these situations, it’s a good idea to speak with a broker who specializes in this area, and Astra Mortgage’s team does this exclusively.

Everyone plans to make all their mortgage payments in full and on time when they sign on the dotted line, but when life throws you a curveball and those payments are late or missed, it can turn ugly very quickly. Unfortunately to a mortgage lender, any late or missed payments are just about the worst thing that can take place.

If you’ve missed a few in a row, you could be in line to have the lender start foreclosing on you, and once that process has started it can get costly quickly to stop it. Or if you’ve had a few late or missed payments in the past with your current lender, they may not renew your mortgage when your maturity date is up.

So if you are having issues with mortgage payments, you seek assistance right away.

If your mortgage reports late on the credit bureau it can be very harmful to any future mortgage lending. But working with an expert can help save you thousands of dollars in interest.

The key to addressing these types of situations are what we call Cause & Cure. When you signed your mortgage, it was expected by all parties that you’d be able to make those payments in full and on time. Something must have changed, or caused you to miss, whether it was injury, illness, or job loss. So we need to be able to determine why now you are able to make these mortgage payments, when in the recent past you’ve struggled to do so. Showing this to the new lender, is of the utmost importance.

If you are dealing with a foreclosure situation, or have missed mortgage payments, please contact us right away and allow us to try and help. The sooner we can act, the better solution we can likely have for you. Allow us to help save your home!

CRA or Revenue Canada Debt can be a quick killer to your loan applications! Almost all banks/lending institutions now insist on getting your Notice of Assessment or Statement from your account to ensure you don’t owe the government any money. And if you do, they are going to turn down your application.

If that debt gets significant, the CRA has the ability to put a lien on your property, which would block your attempts to refinance or even sell your property. The CRA also has the ability to take priority on the title, even ahead of mortgage lenders, which is why many will turn you down when outstanding taxes are owed.

The good news is that Astra Mortgage helps dozens of clients each month get all caught up and square with the government. The big banks may not want to lend over these issues, but we have many Alt lenders, MIC (mortgage investment companies) and who are willing to lend, with the CRA debt being paid directly from the loan proceeds. This not only removes any potential liens, but you’ll feel relief, while opening up more refinance options in the future.

Did you know that by being delinquent on your property taxes, you could be putting your home at risk? Aside from the fact that municipalities rely on property tax dollars for schools, garbage collections, etc – you can actually have liens and judgments registered against you as a measure to get caught up.

Non Payment of Property Taxes Consequences

If you do get behind on your property taxes, the government will usually start by sending you reminder notices before hitting you with penalties and high interest rates as an incentive to get you to pay.

If you do get enough months behind, or by a significant amount, they can also register a tax lien against your home. This lien takes precedent over any other liens (including mortgages) and can even block the sale of your home unless the funds are paid out in full.

Can I Lose My Home in a Property Tax Sale?

Unpaid and delinquent property taxes can cause you to go in to foreclosure. Local governments have that ability to recoup their funds. Many times you can try to arrange payment plans, however if you are behind, you fall to their mercy.

In addition, being behind on your property taxes is usually a breach of terms if you have an existing mortgage. You are obligated to keep up to date, and if your lender gets notified you are behind, it can be an issue. But more pressing, if it is close to renewal time it could alter whether they want to keep you on as a client or are asking to be paid out. The key here is if you are in property tax arrears without permission to defer, then you should be looking at ways to square that up as soon as you can!

Can I get a Property Tax Loan?

Getting a secured mortgage to get caught up on property taxes can be a challenge. The key is to not scare your existing mortgage lender, keeping costs low and fair to you, while also preventing any of the very serious issues from above. Astra Mortgages has been doing these types of loans for nearly a decade and we can absolutely help you work out solutions to get caught up. But also hopefully so when bills are due again, you are in a better position to pay them on time.

Collections agencies have a very bad reputation and are not the types of companies you want to have hounding you. If you have had some credit accounts which have turned to collections, which is now resulting in you being turned down by banks, keep in mind it’s much more common than you think.

There are a number of lenders out there who can look past a few blemishes since nobody chooses to have collection items on their bureaus. They are almost always caused by illness, injury, or some other misfortune and everyone has the intent of paying off their debts to begin with. Life events can happen, so having the right team on your side, who know the space and understanding lenders, can make a huge difference. The team at Astra Mortgage are specialists at bruised credit and dealing with collection agencies. We can give you expert advice, not only how to clean up your credit, but tips on how to settle and possibly help negotiate discounts on your outstanding balances.